Paul Weiss Offers M&A at a Glance for November 2017

In U.S. and global M&A activity for November 2017, total deal volume by dollar value increased to a 12-month high, while the total number of deals decreased to a 12-month low. In the U.S., deal volume increased by 179.0% to $236.40 billion while the number of deals decreased by 15.6% to 712. Globally, deal volume increased by 43.7% to $390.00 billion while the number of deals decreased by 12.9% to 2,839. These large increases in deal volume were, however, driven by one transaction in particular, Broadcom Ltd.’s $130 billion (including assumed debt) unsolicited offer for Qualcomm, Inc. If we excluded this one proposal, U.S. deal volume would have increased by a more modest $106.12 billion (or 25.2%), and global deal volume would have declined by $259.72 billion (or 4.3%), from October to November.

Strategic vs. Sponsor Activity

In the U.S., strategic deal volume increased by 263.0% to $204.90 billion, and the number of deals decreased by 17.2% to 539. Globally, strategic deal volume increased by 61.5% to $338.69 billion and the number of strategic deals decreased by 13.7% to 2,491. Again, if we exclude the Broadcom/Qualcomm proposal, U.S. strategic deal volume would have increased by only 32.2% to $74.62 billion, and global strategic deal volume would have declined by 0.6% to $208.41 billion Figure 1 and Annex Figures 1A—4A. Sponsor-related activity decreased across all measures except for an increase in U.S. sponsor-related deal volume. In the U.S., sponsor-related deal volume increased by 11.4% to $31.51 billion, and the number of deals decreased by 10.4% to 173. Globally, sponsor-related deal volume decreased by 16.9% to $51.31 billion and the number of deals decreased by 7.2% to 348.

Crossborder Activity1

Crossborder activity in November 2017 decreased across all measures, except for a substantial increase in U.S. inbound deal volume. Globally, crossborder deal volume decreased by 24.3% to $79.44 billion, and the number of deals decreased by 12.7% to 630. In the U.S., inbound deal volume increased by 281.1% to $49.39 billion and the number of U.S. inbound deals decreased by 6.2% to 122 transactions. Outbound U.S. deal volume decreased by 35.6% to $5.50 billion, and the number of U.S. outbound deals decreased by 33.6% to 87. Figure 1 and Annex Figures 5A—7A.

In U.S. inbound activity, Canada was the leading country of origin for November 2017, with $29.25 billion in deal volume, propelled by the announced acquisition of GGP, Inc. for $27.83 billion by Brookfield Property Partners LP. Canada retained the lead for U.S. inbound activity by dollar value over the last 12 months, with $69.99 billion in volume, and remained the leading country of origin by number of U.S. inbound deals in November (32) and over the last 12 months (408). India was the largest target for U.S. outbound activity in November by deal volume ($1.22 billion), driven by American Tower Corp.’s announced acquisitions of both Vodafone India Ltd for $587.51 million and Idea Cellular Infrastructure Services Ltd for $610.40 million. Germany retained its lead in outbound deal volume over the last 12 months ($56.36 billion). Canada took the lead in the number of U.S. outbound deals in November (19) while the United Kingdom retained its trailing 12 month lead (284). Figure 3.

U.S. Deals by Industry

Computers & Electronics remained the most active target industry by dollar value in November 2017 ($148.14 billion), driven by the $130 billion Broadcom/Qualcomm for proposal and the $6.69 billion acquisition of Cavium, Inc. by Marvell Technology Group Ltd. Computer & Electronics also remained the most active target industry by number of deals in November (186) and over the last 12 months (2,817) and the most active target industry by deal volume over the last 12 months ($287.39 billion). Figures 2 and 5.

U.S. Public Mergers

As for U.S. public merger deal terms in November 2017, average target break fees decreased to below the 12-month average of 3.5% to 3.1%. Average reverse break fees decreased to 4.0%, below the 12-month average of 5.5%. Figures 6 and 7. The use of cash consideration in November 2017 decreased to 50.0%, below its 12-month average of 60.3%. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers was 16.7%, below the 12-month average of 20.7%. Figure 11. Finally, the incidence of hostile offers in November 2017 was 25.0%, above the 12-month average of 11.2%. Figure 12.

All Figures referenced above are available here.

ENDNOTE

1   Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer (“Outbound”) or the target (“Inbound”) has a U.S. nationality. Broadcom Ltd.’s unsolicited offer for Qualcomm, Inc. is excluded from Figures 1 and 3’s statistics for crossborder transactions per Dealogic definitions. Dealogic does not categorize this proposal as a crossborder transaction because it considers Broadcom to be a U.S. entity, notwithstanding its incorporation in Singapore, based on factors including the locations of its employees, management and “long-lived” assets.

This post comes to us from Paul, Weiss, Rifkind, Wharton & Garrison LLP. It is based on the firm’s memorandum, “M&A at a Glance, December 2017,” available here.